Franchisors:  Working With Franchisees Affected by the Los Angeles Wildfires

The Los Angeles wildfires pose significant challenges for businesses, including franchised businesses. But if a business is lost in a national disaster, support already exists within a franchise system. It’s organic. That is not always the case for a stand-alone business, or a small chain of businesses.

Franchisors have a unique role to play in supporting their franchisees during such crises. Here are some key strategies to help a franchisee:

Communicate Frequently

Maintain open lines of communication. If communication plans don’t exist already, franchisors should:

• Establish a crisis plan to provide updates and gather information on the well-being of franchisees.
• Check in regularly to understand the specific challenges faced by each franchisee. Some challenges might include city-mandated curfews in the burn areas, which could significantly affect operations.
• Share verified information about local resources, evacuation plans, and recovery efforts.

Provide Financial Assistance

Franchisors can ease the financial burden on affected franchisees by:

• Temporarily waiving or deferring royalty fees.
• Offering emergency funding or low-interest loans to help with repairs, inventory replacement, and operational costs.
• Partnering with insurance providers to expedite claims processes.

Future Operations

Helping franchisees resume operations quickly is crucial. Franchisors might offer:

• Assistance with temporary relocation of operations if a location is unusable or needs significant repairs.
• Access to backup equipment, supplies, or staff. Ask other franchisees in the system to help in this regard.
• Guidance on navigating local regulations for rebuilding or reopening.

 Disaster Planning

While immediate support is critical, franchisors should also focus on future resilience by:

• Implementing disaster preparedness training and protocols for all franchisees.
• Encouraging franchisees to review and update their insurance policies regularly.
• Investing in technologies or infrastructure that enhance disaster resilience, such as fire-resistant building materials or backup energy solutions. Professional service franchises like those in tax or accounting might consider moving to an online operations model in times of crisis – so that damage or destruction to a brick-and-mortar facility can easily be replaced with teleworking services.

By working together, exploring alternatives, and communicating frequently, franchisors and franchisees can weather the challenges of natural disasters and emerge stronger as a network.

Barry Kurtz and Tal Grinblat are California Certified Specialists in Franchise and Distribution Law.

This information provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular fact or situation.